In economics , essential goods are those products and services that are indispensable for people’s survival or for the basic performance of productive activity, so their demand does not decrease even in times of crisis. For example: electricity, meat, clothing.
Essential goods are a type of normal goods (that is, they comply with the normal law of demand), that is, goods whose demand increases as the consumer ‘s income increases , although in this case it increases in a way that is not proportional to income, that is, the more income a person has, the more essential goods they can buy, but their need for them decreases and, therefore, so does the quantity of them they consume. This phenomenon is known in economics as Engel’s law.
For example: people on a carnivorous diet always need to buy meat, but lower-income people buy only a few essential cuts of meat, while higher-income people can buy different types of meat or even substitute them with other options, so the demand for meat may increase among the wealthy classes, but only up to a point, since basic needs are already covered.
In this, on the other hand, a distinction is made between essential goods and luxury goods : the former are considered indispensable for life and, therefore, must be available to everyone, while the latter are exquisite goods that are not indispensable for living, so that their demand depends on who can pay for them.
For the most part, essential goods are provided by public infrastructure or by companies whose work is closely coordinated with the State. For this reason, many of their products may benefit from subsidies, price controls, or other mechanisms that guarantee universal access to goods.
- See also: Types of goods
Examples of essential goods
It is important to note that the consideration of a good as a basic necessity may depend on the laws and considerations of the State, so they are not always the same from one country to another. It is even possible that, in the face of an unexpected or emergency situation, a government may expand or reduce the list of what is considered essential goods.
However, roughly speaking, the following are examples of essential goods:
- Basic services: electricity, water supply, sewage service, gas supply, telephone and internet service, among others.
- The basic sources of animal protein: beef, pork and chicken, mainly, although normally the cuts and varieties considered standard or basic.
- Processed foods for mass consumption : rice, pasta, flour, bread, common cheeses and other products that are present continuously and abundantly in people’s diets.
- Common clothing: clothing that does not come from luxury brands or designers, but is generally and widely available.
- Baby food: compotes, milk and other food products intended for children (such as milk substitutes).
- Basic cooking ingredients: such as cooking oil, vinegar, salt, sugar, eggs, among others.
